By Evie Liu

Middle East tensions and rising energy costs are reshaping the global operations and expansion plans of some major fast-food chains, one analyst says. Some are more exposed than others.

Given the conflict between the U.S. and Iran, American brands are at risk of reduced demand in the Middle East as consumers pull back, Jefferies analyst Andy Barish wrote in a Tuesday report. But most fast-food chains have limited operations in the region, which typically makes up just 2% to 4% of their global units.

What matters more are higher energy prices that could ripple through transportation and food inputs to affect consumer spending and profits in other key markets, he says.

China and India -- countries that offer the most runway for expansion -- are especially vulnerable to higher energy costs as they rely heavily on oil imports, he says.

In India, supply shortages of liquefied natural gas have disrupted restaurant operations, while in China, high input costs have cut into operating margins given restaurants' limited power to raise prices in a highly competitive market, Barish says.

Emerging markets over the longterm will continue to urbanize along with rising incomes. But operators for now are likely to slow the pace of new openings, focus on value offerings to protect traffic, and control costs to preserve margins, Barish says.

For fast-food chains, China and India are expected to drive a significant share of new openings in the next decade. Domino's Pizza, Yum! Brands, and Starbucks are more vulnerable to a slowdown in franchisee appetite for new stores, according to Barish.

He estimates more than 65% of Domino's unit growth over the next five years is expected to come from the Middle East, China, and India. Roughly half of Yum and Starbucks' expansion pipeline is exposed to those regions.

Restaurant Brands International, which owns chains like Burger King, is more insulated. Only 11% of its stores are based in the Middle East, China, and India, and the regions only make up a quarter of the company's future expansion plans.

Barish says McDonald's is in the best position. While nearly a quarter of the burger chain's stores are in the Middle East, China, and India, those regions only account for 35% of its future unit growth, given the company's more diversified development plans, he says.

McDonald's large scale, strong franchise structure, and steady same-store sales performance also provides a buffer against economic volatility, Barish says: "McDonald's provides the best visibility into accelerating unit growth."

McDonald's stock has lost 7.2% so far this year. Domino's has tumbled 13.2%, while Yum Brands, Restaurant Brands International, and Starbucks have gained 7.4%, 15.9%, and 17.3%, respectively.

Write to Evie Liu at evie.liu@barrons.com

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April 14, 2026 16:31 ET (20:31 GMT)

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